47:
2277:
2267:
598:. Given a number of competing investment opportunities, investors are expected to put their capital to work in order to maximize the return. In other words, the cost of capital is the rate of return that capital could be expected to earn in the best alternative investment of equivalent risk; this is the
1286:
are a component of equity, and, therefore, the cost of retained earnings (internal equity) is equal to the cost of equity as explained above. Dividends (earnings that are paid to investors and not retained) are a component of the return on capital to equity holders, and influence the cost of capital
677:
to the company which it could then use, for a specified period of time (the term of the bond) to finance its project. The company would also make regular payments to the investor of 5% of the original amount they invested ($ 10,000), at a yearly or monthly rate depending on the specifics of the bond
606:
A company's securities typically include both debt and equity; one must therefore calculate both the cost of debt and the cost of equity to determine a company's cost of capital. Importantly, both cost of debt and equity must be forward looking, and reflect the expectations of risk and return in the
602:
of capital. If a project is of similar risk to a company's average business activities it is reasonable to use the company's average cost of capital as a basis for the evaluation or cost of capital is a firm's cost of raising funds. However, for projects outside the core business of the company, the
752:
The cost of equity follows the same principle: the investors expect a certain return from their investment, and the company must pay this amount in order for the investors to be willing to invest in the company. (Although the cost of equity is calculated differently since dividends, unlike interest
1360:
Because of tax advantages on debt issuance, it will be cheaper to issue debt rather than new equity (this is only true for profitable firms, tax breaks are available only to profitable firms). At some point, however, the cost of issuing new debt will be greater than the cost of issuing new equity.
1306:
The weighted cost of capital (WACC) is used in finance to measure a firm's cost of capital. WACC is not dictated by management. Rather, it represents the minimum return that a company must earn on an existing asset base to satisfy its creditors, owners, and other providers of capital, or they will
626:
Suppose a company considers taking on a project or investment of some kind, for example installing a new piece of machinery in one of their factories. Installing this new machinery will cost money; paying the technicians to install the machinery, transporting the machinery, buying the parts and so
1369:
that the company must pay in order to borrow money. By utilizing too much debt in its capital structure, this increased default risk can also drive up the costs for other sources (such as retained earnings and preferred stock) as well. Management must identify the "optimal mix" of financing – the
1223:
748:
Theoretically, if the company were to raise further capital by issuing more of the same bonds, the new investors would also expect a 50% return on their investment (although in practice the required return varies depending on the size of the investment, the lifetime of the loan, the risk of the
627:
on. This new machinery is also expected to generate new profit (otherwise, assuming the company is interested in profit, the company would not consider the project in the first place). So the company will finance the project with two broad categories of finance: issuing
713:
to the investor. This is the amount that compensates the investor for taking the risk of investing in the company (since, if it happens that the project fails completely and the company goes bankrupt, there is a chance that the investor does not get their money back).
581:
on a portfolio company's existing securities". It is used to evaluate new projects of a company. It is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.
1133:
1330:
on the balance sheet. To calculate the firm's weighted cost of capital, we must first calculate the costs of the individual financing sources: Cost of Debt, Cost of
Preference Capital, and Cost of Equity Cap.
855:
1028:
658:
from selling the shares after their value increases). The idea is that some of the profit generated by this new project will be used to repay the debt and satisfy the new shareholders.
773:. This default premium will rise as the amount of debt increases (since, all other things being equal, the risk rises as the cost of debt rises). Since in most cases debt expense is a
1681:
1322:) plus the cost of its debt (the cost of debt should be continually updated as the cost of debt changes as a result of interest rate changes). Notice that the "equity" in the
646:
The new debt-holders and shareholders who have decided to invest in the company to fund this new machinery will expect a return on their investment: debt-holders require
906:
761:
When companies borrow funds from outside lenders, the interest paid on these funds is called the cost of debt. The cost of debt is computed by taking the rate on a
1435:
showed that, under certain assumptions (no tax, no possibility of bankruptcy), the value of a levered firm and the value of an unlevered firm should be the same.
879:
1674:
1412:
Lambert, Leuz and
Verrecchia (2007) have found that the quality of accounting information can affect a firm's cost of capital, both directly and indirectly.
1218:{\displaystyle K_{cs}={\frac {{\text{Dividend}}_{\text{Payment/Share}}(1+{\text{Growth}})}{{\text{Price}}_{\text{Market}}}}+{\text{Growth}}_{\text{rate}}}
1334:
Calculation of WACC is an iterative procedure which requires estimation of the fair market value of equity capital if the company is not listed. The
721:
was paid by the company to the investor as a reward for investing their money in the company. In essence, this is how much the company paid to borrow
1667:
1257:
have been 1.6% per year over the period 1910–2005. The dividends have increased the total "real" return on average equity to the double, about 3.2%.
1528:
544:
1493:
1249:
during the twentieth century it has averaged around 5% whereas in the emerging markets, it can be as high as 7%. The equity market real
1338:
method (APV) is much easier to use in this case as it separates the value of the project from the value of its financing program.
791:
607:
future. This means, for instance, that the past cost of debt is not a good indicator of the actual forward looking cost of debt.
689:
Suppose the bond had a lifetime of ten years and coupon payments were made yearly. This means that the investor would receive
1611:
930:
by comparing the investment to other investments (comparable) with similar risk profiles. It is commonly computed using the
411:
673:
with an interest rate of 5%. This means that the company would issue the bond to some willing investor, who would give the
1260:
The sensitivity to market risk (β) is unique for each firm and depends on everything from management to its business and
951:
1112:
1111:
An alternative to the estimation of the required return by the capital asset pricing model as above, is the use of the
603:
current cost of capital may not be the appropriate yardstick to use, as the risks of the businesses are not the same.
2148:
1623:
1301:
611:
2306:
1469:
1378:
777:, the cost of debt is computed on an after-tax basis to make it comparable with the cost of equity (earnings are
537:
2061:
615:
386:
2207:
1432:
1426:
513:
335:
1575:
Modigliani, F.; Miller, M. (1958). "The Cost of
Capital, Corporation Finance and the Theory of Investment".
2001:
1577:
1541:
1254:
17:
1725:
1517:
2118:
931:
61:
2301:
2081:
530:
287:
2252:
2237:
2227:
2066:
1881:
941:
Cost of equity = Risk free rate of return + Beta × (market rate of return – risk free rate of return)
396:
2270:
2247:
2185:
2011:
1936:
1896:
1876:
1981:
1971:
1941:
1911:
1851:
1327:
1124:
701:
would be regained at the end of the ten years (entailing zero gain or loss), but they would have
578:
216:
1384:
The structure of capital should be determined considering the weighted average cost of capital.
2222:
2123:
1986:
1824:
1794:
1335:
361:
1490:
2138:
1652:
1319:
493:
406:
1123:
The expected return (or required rate of return for investors) can be calculated with the "
2160:
2155:
1659:
1603:
1323:
884:
340:
243:
1621:
Yee, Kenton K. (2000). "Aggregation, Dividend
Irrelevancy, and Earnings-Value Relations".
678:(these are called coupon payments). At the end of the lifetime of the bond (when the bond
8:
2110:
1246:
697:
back at the end of the ten years. From the investor's point of view, their investment of
595:
518:
1310:
The total capital for a firm is the value of its equity (for a firm without outstanding
679:
2280:
2192:
2175:
2133:
2056:
2048:
1834:
1819:
1694:
1640:
1586:
864:
774:
508:
466:
451:
421:
345:
273:
190:
68:
56:
2217:
945:
where Beta = sensitivity to movements in the relevant market. Thus in symbols we have
2212:
2197:
2128:
2071:
2016:
1991:
1961:
1951:
1861:
1844:
1765:
1760:
1720:
1715:
1702:
1690:
1648:
1644:
1607:
1557:
1508:
Fernandes, Nuno. 2014, Finance for
Executives: A Practical Guide for Managers, p. 32.
1481:
Fernandes, Nuno. 2014, Finance for
Executives: A Practical Guide for Managers, p. 17.
1431:
If there were no tax advantages for issuing debt, and equity could be freely issued,
1371:
1355:
1311:
1283:
1261:
1104:
The risk free rate is the yield on long term bonds in the particular market, such as
591:
441:
436:
426:
371:
197:
165:
2170:
2165:
2076:
2031:
1931:
1829:
1750:
1735:
1710:
1632:
1553:
1449:
1315:
1253:
return has been about the same as annual real GDP growth. The capital gains on the
1235:
1105:
1053:
636:
599:
574:
488:
483:
456:
326:
302:
297:
258:
238:
202:
150:
38:
1374:
where the cost of capital is minimized so that the firm's value can be maximized.
2232:
2096:
2086:
2021:
1946:
1916:
1866:
1814:
1786:
1730:
1497:
640:
446:
431:
391:
207:
145:
106:
101:
1636:
1600:
Investment
Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions
46:
2180:
2091:
1444:
1381:
show that global debt issuance exceeds equity issuance with a 90 to 10 margin.
917:
766:
762:
662:
632:
461:
366:
316:
278:
170:
117:
111:
91:
86:
2295:
1799:
1366:
401:
376:
228:
175:
610:
Once cost of debt and cost of equity have been determined, their blend, the
2038:
1886:
1871:
1745:
1362:
1250:
1097:
1079:
770:
655:
503:
478:
248:
140:
135:
126:
96:
1996:
1966:
1809:
1740:
1239:
1066:
498:
311:
268:
263:
253:
160:
77:
2242:
2202:
2006:
1956:
1926:
1804:
1590:
782:
753:
payments, are not necessarily a fixed payment or a legal requirement.)
562:
661:
Suppose that one of the sources of finance for this new project was a
1976:
1839:
938:
Cost of equity = Risk free rate of return + Premium expected for risk
666:
558:
1277:
2026:
1921:
1906:
1346:
Below are a list of factors that might affect the cost of capital.
651:
647:
223:
1856:
1540:
Lambert, Richard; Leuz, Christian; Verrecchia, Robert E. (2007).
1270:
1265:
1234:
The models state that investors will expect a return that is the
473:
416:
1755:
1597:
1542:"Accounting Information, Disclosure, and the Cost of Capital"
778:
155:
1689:
850:{\displaystyle K_{D}=(R_{f}+{\text{credit risk rate}})(1-T)}
923:
628:
614:(WACC), can be calculated. This WACC can then be used as a
570:
381:
1341:
631:, by taking out a loan or other debt instrument such as a
1415:
1245:
The risk premium varies over time and place, but in some
1291:
Cost of internal equity = + growth rate of dividends)]
1274:(past) returns and past experience with similar firms.
618:
for a project's projected free cash flows to the firm.
1539:
1392:
1136:
954:
887:
867:
794:
709:
per year for ten years would amount to a net gain of
1574:
1295:
1023:{\displaystyle E_{s}=R_{f}+\beta _{s}(R_{m}-R_{f})}
1217:
1022:
900:
873:
849:
1278:Cost of retained earnings/cost of internal equity
693:every year for ten years, and then finally their
590:For an investment to be worthwhile, the expected
2293:
1502:
1475:
785:by the tax rate. The formula can be written as
577:), or from an investor's point of view is "the
781:as well). Thus, for profitable firms, debt is
1675:
538:
1420:
1397:
1326:is the market value of all equity, not the
741:out of their profits; thus we say that the
2276:
2266:
1682:
1668:
1387:
1361:This is because adding debt increases the
1268:" (beforehand), but can be estimated from
545:
531:
1407:
1598:Rosenbaum, Joshua; Joshua Pearl (2009).
1342:Factors that can affect cost of capital
1100:of market assets over risk free assets.
1056:in that market (government bond yield);
569:is the cost of a company's funds (both
14:
2294:
1416:Breakpoint of marginal cost of capital
1043:is the expected return for a security;
1663:
1529:Factors Affecting the Cost of Capital
769:of the corporate debt, then adding a
705:gained from the coupon payments; the
1349:
1318:, this is the same as the company's
1620:
1242:(β) times the market risk premium.
1238:plus the security's sensitivity to
24:
1568:
1393:Financial and investment decisions
1118:
650:payments and shareholders require
594:has to be higher than the cost of
25:
2318:
1518:Factors Affecting Cost of Capital
1402:
911:
2275:
2265:
1624:Contemporary Accounting Research
1558:10.1111/j.1475-679X.2007.00238.x
1302:Weighted average cost of capital
1296:Weighted average cost of capital
1078:is the historical return of the
682:), the company would return the
612:weighted average cost of capital
585:
45:
1470:Principles of Corporate Finance
1379:Thomson Financial league tables
756:
288:Over-the-counter (off-exchange)
2062:Debtor-in-possession financing
1546:Journal of Accounting Research
1533:
1522:
1511:
1484:
1462:
1264:. This value cannot be known "
1182:
1168:
1113:Fama–French three-factor model
1017:
991:
881:is the corporate tax rate and
844:
832:
829:
808:
13:
1:
1455:
514:Sustainable development goals
2002:Staggered board of directors
1491:Fred's Intelligent Bear Site
1255:Dow Jones Industrial Average
733:of new capital. So to raise
7:
2119:Accretion/dilution analysis
1637:10.1506/GEH4-WNJR-G58F-UM0U
1438:
1229:
932:capital asset pricing model
765:whose duration matches the
10:
2323:
2082:Leveraged recapitalization
1472:", McGraw Hill, Chapter 10
1424:
1353:
1299:
915:
621:
2261:
2253:Valuation using multiples
2238:Sum-of-the-parts analysis
2208:Modigliani–Miller theorem
2109:
2067:Dividend recapitalization
2047:
1895:
1882:Secondary market offering
1785:
1774:
1701:
1427:Modigliani–Miller theorem
1421:Modigliani–Miller theorem
639:, usually by issuing new
397:Diversification (finance)
27:Cost of a company's funds
2271:List of investment banks
2186:Free cash flow to equity
2012:Super-majority amendment
1937:Management due diligence
1877:Seasoned equity offering
1578:American Economic Review
1468:Brealey, Myers, Allen. "
1398:Current income tax rates
1287:through that mechanism.
1982:Shareholder rights plan
1972:Post-merger integration
1942:Managerial entrenchment
1912:Contingent value rights
1852:Initial public offering
1388:Current dividend policy
1125:dividend capitalization
908:is the risk free rate.
737:the company had to pay
579:required rate of return
2307:Management cybernetics
2124:Adjusted present value
1987:Special-purpose entity
1825:Direct public offering
1795:At-the-market offering
1408:Accounting information
1336:Adjusted Present Value
1219:
1065:is the sensitivity to
1024:
902:
875:
851:
745:in this case was 50%.
362:Alternative investment
2139:Conglomerate discount
1604:John Wiley & Sons
1433:Miller and Modigliani
1320:market capitalization
1220:
1025:
903:
901:{\displaystyle R_{f}}
876:
852:
494:Investment management
407:Environmental finance
2161:Economic value added
2156:Discounted cash flow
1328:shareholders' equity
1324:debt to equity ratio
1134:
952:
885:
865:
792:
749:project and so on).
1746:Senior secured debt
1247:developed countries
519:Sustainable finance
33:Part of a series on
2281:Outline of finance
2193:Market value added
2176:Financial modeling
2134:Business valuation
2057:Debt restructuring
1835:Follow-on offering
1820:Corporate spin-off
1778:(terms/conditions)
1695:investment banking
1496:2004-12-09 at the
1307:invest elsewhere.
1215:
1020:
898:
871:
847:
775:deductible expense
509:Speculative attack
274:Structured product
2302:Financial capital
2289:
2288:
2213:Net present value
2198:Minority interest
2129:Associate company
2105:
2104:
2072:Financial sponsor
1992:Special situation
1962:Pre-emption right
1952:Minority discount
1862:Private placement
1761:Subordinated debt
1716:Exchangeable debt
1703:Capital structure
1691:Corporate finance
1613:978-0-470-44220-3
1372:capital structure
1356:Capital structure
1350:Capital structure
1284:retained earnings
1262:capital structure
1212:
1207:
1198:
1195:
1190:
1180:
1165:
1160:
1127:model", which is
1069:for the security;
874:{\displaystyle T}
827:
717:This net gain of
592:return on capital
555:
554:
382:Banks and banking
372:Asset (economics)
198:Credit derivative
166:Stock certificate
39:Financial markets
16:(Redirected from
2314:
2279:
2278:
2269:
2268:
2171:Fairness opinion
2166:Enterprise value
2149:Weighted average
2077:Leveraged buyout
1932:Drag-along right
1830:Equity carve-out
1787:Equity offerings
1783:
1782:
1779:
1751:Shareholder loan
1736:Second lien debt
1731:Preferred equity
1711:Convertible debt
1684:
1677:
1670:
1661:
1660:
1656:
1617:
1594:
1562:
1561:
1537:
1531:
1526:
1520:
1515:
1509:
1506:
1500:
1488:
1482:
1479:
1473:
1466:
1450:Preference share
1236:risk-free return
1224:
1222:
1221:
1216:
1214:
1213:
1210:
1208:
1205:
1199:
1197:
1196:
1193:
1191:
1188:
1185:
1181:
1178:
1167:
1166:
1163:
1161:
1158:
1154:
1149:
1148:
1106:government bonds
1054:risk-free return
1052:is the expected
1029:
1027:
1026:
1021:
1016:
1015:
1003:
1002:
990:
989:
977:
976:
964:
963:
907:
905:
904:
899:
897:
896:
880:
878:
877:
872:
856:
854:
853:
848:
828:
826:credit risk rate
825:
820:
819:
804:
803:
740:
736:
732:
724:
720:
712:
708:
700:
696:
692:
685:
676:
672:
600:opportunity cost
547:
540:
533:
489:Impact investing
484:Growth investing
217:Foreign exchange
203:Futures exchange
151:Registered share
49:
30:
29:
21:
2322:
2321:
2317:
2316:
2315:
2313:
2312:
2311:
2292:
2291:
2290:
2285:
2257:
2233:Stock valuation
2228:Residual income
2144:Cost of capital
2101:
2097:Project finance
2087:High-yield debt
2043:
2022:Tag-along right
1947:Mandatory offer
1917:Control premium
1898:
1891:
1867:Public offering
1815:Bought out deal
1777:
1776:
1770:
1697:
1688:
1614:
1602:. Hoboken, NJ:
1571:
1569:Further reading
1566:
1565:
1538:
1534:
1527:
1523:
1516:
1512:
1507:
1503:
1498:Wayback Machine
1489:
1485:
1480:
1476:
1467:
1463:
1458:
1441:
1429:
1423:
1418:
1410:
1405:
1400:
1395:
1390:
1365:– and thus the
1358:
1352:
1344:
1304:
1298:
1280:
1232:
1209:
1204:
1203:
1192:
1187:
1186:
1177:
1162:
1157:
1156:
1155:
1153:
1141:
1137:
1135:
1132:
1131:
1121:
1119:Expected return
1093:
1089:
1076:
1063:
1050:
1041:
1011:
1007:
998:
994:
985:
981:
972:
968:
959:
955:
953:
950:
949:
920:
914:
892:
888:
886:
883:
882:
866:
863:
862:
824:
815:
811:
799:
795:
793:
790:
789:
771:default premium
759:
738:
734:
730:
722:
718:
710:
706:
698:
694:
690:
686:they borrowed.
683:
674:
670:
624:
588:
567:cost of capital
551:
392:Climate finance
321:
307:
235:
234:
214:
213:
208:Hybrid security
146:Preferred stock
116:
107:High-yield debt
102:Government bond
28:
23:
22:
15:
12:
11:
5:
2320:
2310:
2309:
2304:
2287:
2286:
2284:
2283:
2273:
2262:
2259:
2258:
2256:
2255:
2250:
2248:Terminal value
2245:
2240:
2235:
2230:
2225:
2220:
2215:
2210:
2205:
2200:
2195:
2190:
2189:
2188:
2181:Free cash flow
2178:
2173:
2168:
2163:
2158:
2153:
2152:
2151:
2141:
2136:
2131:
2126:
2121:
2115:
2113:
2107:
2106:
2103:
2102:
2100:
2099:
2094:
2092:Private equity
2089:
2084:
2079:
2074:
2069:
2064:
2059:
2053:
2051:
2045:
2044:
2042:
2041:
2036:
2035:
2034:
2024:
2019:
2014:
2009:
2004:
1999:
1994:
1989:
1984:
1979:
1974:
1969:
1964:
1959:
1954:
1949:
1944:
1939:
1934:
1929:
1924:
1919:
1914:
1909:
1903:
1901:
1893:
1892:
1890:
1889:
1884:
1879:
1874:
1869:
1864:
1859:
1854:
1849:
1848:
1847:
1837:
1832:
1827:
1822:
1817:
1812:
1807:
1802:
1797:
1791:
1789:
1780:
1772:
1771:
1769:
1768:
1763:
1758:
1753:
1748:
1743:
1738:
1733:
1728:
1723:
1721:Mezzanine debt
1718:
1713:
1707:
1705:
1699:
1698:
1687:
1686:
1679:
1672:
1664:
1658:
1657:
1631:(2): 453–480.
1618:
1612:
1595:
1585:(3): 261–297.
1570:
1567:
1564:
1563:
1552:(2): 385–420.
1532:
1521:
1510:
1501:
1483:
1474:
1460:
1459:
1457:
1454:
1453:
1452:
1447:
1445:Ordinary share
1440:
1437:
1425:Main article:
1422:
1419:
1417:
1414:
1409:
1406:
1404:
1403:Interest rates
1401:
1399:
1396:
1394:
1391:
1389:
1386:
1354:Main article:
1351:
1348:
1343:
1340:
1300:Main article:
1297:
1294:
1293:
1292:
1279:
1276:
1231:
1228:
1227:
1226:
1202:
1184:
1176:
1173:
1170:
1152:
1147:
1144:
1140:
1120:
1117:
1102:
1101:
1091:
1087:
1083:
1074:
1070:
1061:
1057:
1048:
1044:
1039:
1031:
1030:
1019:
1014:
1010:
1006:
1001:
997:
993:
988:
984:
980:
975:
971:
967:
962:
958:
943:
942:
939:
918:Cost of equity
916:Main article:
913:
912:Cost of equity
910:
895:
891:
870:
859:
858:
846:
843:
840:
837:
834:
831:
823:
818:
814:
810:
807:
802:
798:
767:term structure
763:risk-free bond
758:
755:
635:; and issuing
623:
620:
587:
584:
553:
552:
550:
549:
542:
535:
527:
524:
523:
522:
521:
516:
511:
506:
501:
496:
491:
486:
481:
476:
471:
470:
469:
464:
459:
454:
449:
444:
439:
434:
429:
424:
414:
409:
404:
399:
394:
389:
384:
379:
374:
369:
367:Angel investor
364:
356:
355:
351:
350:
349:
348:
343:
338:
330:
329:
323:
322:
320:
319:
314:
308:
306:
305:
300:
294:
291:
290:
284:
283:
282:
281:
279:Swap (finance)
276:
271:
266:
261:
256:
251:
246:
241:
233:
232:
226:
219:
215:
212:
211:
205:
200:
193:
189:
186:
185:
181:
180:
179:
178:
173:
171:Stock exchange
168:
163:
158:
153:
148:
143:
138:
130:
129:
123:
122:
121:
120:
118:Securitization
114:
112:Municipal bond
109:
104:
99:
94:
92:Corporate bond
89:
87:Bond valuation
81:
80:
74:
73:
72:
71:
59:
51:
50:
42:
41:
35:
34:
26:
9:
6:
4:
3:
2:
2319:
2308:
2305:
2303:
2300:
2299:
2297:
2282:
2274:
2272:
2264:
2263:
2260:
2254:
2251:
2249:
2246:
2244:
2241:
2239:
2236:
2234:
2231:
2229:
2226:
2224:
2221:
2219:
2216:
2214:
2211:
2209:
2206:
2204:
2201:
2199:
2196:
2194:
2191:
2187:
2184:
2183:
2182:
2179:
2177:
2174:
2172:
2169:
2167:
2164:
2162:
2159:
2157:
2154:
2150:
2147:
2146:
2145:
2142:
2140:
2137:
2135:
2132:
2130:
2127:
2125:
2122:
2120:
2117:
2116:
2114:
2112:
2108:
2098:
2095:
2093:
2090:
2088:
2085:
2083:
2080:
2078:
2075:
2073:
2070:
2068:
2065:
2063:
2060:
2058:
2055:
2054:
2052:
2050:
2046:
2040:
2037:
2033:
2030:
2029:
2028:
2025:
2023:
2020:
2018:
2015:
2013:
2010:
2008:
2005:
2003:
2000:
1998:
1995:
1993:
1990:
1988:
1985:
1983:
1980:
1978:
1975:
1973:
1970:
1968:
1965:
1963:
1960:
1958:
1955:
1953:
1950:
1948:
1945:
1943:
1940:
1938:
1935:
1933:
1930:
1928:
1925:
1923:
1920:
1918:
1915:
1913:
1910:
1908:
1905:
1904:
1902:
1900:
1894:
1888:
1885:
1883:
1880:
1878:
1875:
1873:
1870:
1868:
1865:
1863:
1860:
1858:
1855:
1853:
1850:
1846:
1843:
1842:
1841:
1838:
1836:
1833:
1831:
1828:
1826:
1823:
1821:
1818:
1816:
1813:
1811:
1808:
1806:
1803:
1801:
1800:Book building
1798:
1796:
1793:
1792:
1790:
1788:
1784:
1781:
1773:
1767:
1764:
1762:
1759:
1757:
1754:
1752:
1749:
1747:
1744:
1742:
1739:
1737:
1734:
1732:
1729:
1727:
1724:
1722:
1719:
1717:
1714:
1712:
1709:
1708:
1706:
1704:
1700:
1696:
1692:
1685:
1680:
1678:
1673:
1671:
1666:
1665:
1662:
1654:
1650:
1646:
1642:
1638:
1634:
1630:
1626:
1625:
1619:
1615:
1609:
1605:
1601:
1596:
1592:
1588:
1584:
1580:
1579:
1573:
1572:
1559:
1555:
1551:
1547:
1543:
1536:
1530:
1525:
1519:
1514:
1505:
1499:
1495:
1492:
1487:
1478:
1471:
1465:
1461:
1451:
1448:
1446:
1443:
1442:
1436:
1434:
1428:
1413:
1385:
1382:
1380:
1375:
1373:
1368:
1367:interest rate
1364:
1357:
1347:
1339:
1337:
1332:
1329:
1325:
1321:
1317:
1313:
1308:
1303:
1290:
1289:
1288:
1285:
1275:
1273:
1272:
1267:
1263:
1258:
1256:
1252:
1248:
1243:
1241:
1237:
1200:
1174:
1171:
1164:Payment/Share
1150:
1145:
1142:
1138:
1130:
1129:
1128:
1126:
1116:
1114:
1109:
1107:
1099:
1095:
1084:
1081:
1077:
1071:
1068:
1064:
1058:
1055:
1051:
1045:
1042:
1036:
1035:
1034:
1012:
1008:
1004:
999:
995:
986:
982:
978:
973:
969:
965:
960:
956:
948:
947:
946:
940:
937:
936:
935:
933:
929:
926:of equity is
925:
919:
909:
893:
889:
868:
841:
838:
835:
821:
816:
812:
805:
800:
796:
788:
787:
786:
784:
780:
776:
772:
768:
764:
754:
750:
746:
744:
728:
725:. It was the
715:
704:
687:
681:
668:
664:
659:
657:
653:
649:
644:
642:
638:
634:
630:
619:
617:
616:discount rate
613:
608:
604:
601:
597:
593:
586:Basic concept
583:
580:
576:
572:
568:
564:
560:
548:
543:
541:
536:
534:
529:
528:
526:
525:
520:
517:
515:
512:
510:
507:
505:
502:
500:
497:
495:
492:
490:
487:
485:
482:
480:
477:
475:
472:
468:
465:
463:
460:
458:
455:
453:
450:
448:
445:
443:
440:
438:
435:
433:
430:
428:
425:
423:
420:
419:
418:
415:
413:
410:
408:
405:
403:
402:Eco-investing
400:
398:
395:
393:
390:
388:
385:
383:
380:
378:
377:Asset pricing
375:
373:
370:
368:
365:
363:
360:
359:
358:
357:
354:Related areas
353:
352:
347:
344:
342:
339:
337:
334:
333:
332:
331:
328:
325:
324:
318:
315:
313:
310:
309:
304:
301:
299:
296:
295:
293:
292:
289:
286:
285:
280:
277:
275:
272:
270:
267:
265:
262:
260:
257:
255:
252:
250:
247:
245:
242:
240:
237:
236:
230:
229:Exchange rate
227:
225:
221:
220:
218:
209:
206:
204:
201:
199:
195:
194:
192:
188:
187:
184:Other markets
183:
182:
177:
176:Watered stock
174:
172:
169:
167:
164:
162:
159:
157:
154:
152:
149:
147:
144:
142:
139:
137:
134:
133:
132:
131:
128:
125:
124:
119:
115:
113:
110:
108:
105:
103:
100:
98:
95:
93:
90:
88:
85:
84:
83:
82:
79:
76:
75:
70:
67:
63:
60:
58:
57:Public market
55:
54:
53:
52:
48:
44:
43:
40:
37:
36:
32:
31:
19:
2223:Real options
2143:
2039:Tender offer
1899:acquisitions
1887:Underwriting
1872:Rights issue
1775:Transactions
1628:
1622:
1599:
1582:
1576:
1549:
1545:
1535:
1524:
1513:
1504:
1486:
1477:
1464:
1430:
1411:
1383:
1376:
1363:default risk
1359:
1345:
1333:
1309:
1305:
1281:
1269:
1259:
1251:capital gain
1244:
1233:
1122:
1110:
1103:
1098:risk premium
1085:
1080:stock market
1072:
1059:
1046:
1037:
1032:
944:
927:
921:
860:
760:
757:Cost of debt
751:
747:
743:cost of debt
742:
726:
716:
702:
688:
660:
656:capital gain
645:
625:
609:
605:
589:
566:
556:
504:Market trend
479:Greenwashing
336:Participants
141:Growth stock
136:Common stock
127:Stock market
97:Fixed income
65:
18:Cost of debt
1997:Squeeze-out
1967:Proxy fight
1897:Mergers and
1810:Bought deal
1741:Senior debt
1240:market risk
1067:market risk
729:of raising
665:(issued at
499:Market risk
312:Spot market
269:Reinsurance
264:Real estate
254:Mutual fund
191:Derivatives
161:Stockbroker
78:Bond market
2296:Categories
2243:Tax shield
2203:Mismarking
2007:Stock swap
1957:Pitch book
1927:Divestment
1805:Bookrunner
1726:Pari passu
1456:References
1282:Note that
783:discounted
563:accounting
341:Regulation
69:Securities
2218:Pure play
2111:Valuation
1977:Sell side
1840:Greenshoe
1645:154429249
1005:−
983:β
934:formula:
839:−
739:$ 100,000
735:$ 200,000
731:$ 200,000
723:$ 200,000
719:$ 100,000
711:$ 100,000
699:$ 200,000
695:$ 200,000
684:$ 200,000
675:$ 200,000
671:$ 200,000
667:par value
652:dividends
559:economics
442:corporate
417:Financial
239:Commodity
2049:Leverage
2027:Takeover
1922:Demerger
1907:Buy side
1494:Archived
1439:See also
1312:warrants
1230:Comments
1159:Dividend
928:inferred
707:$ 10,000
691:$ 10,000
648:interest
467:services
457:personal
452:forecast
422:analysis
346:Clearing
298:Forwards
224:Currency
62:Exchange
2032:Reverse
2017:Synergy
1857:Pre-IPO
1845:Reverse
1766:Warrant
1591:1809766
1316:options
1271:ex post
1266:ex ante
1096:is the
1033:where:
680:matures
622:Example
596:capital
474:Fintech
437:betting
427:analyst
327:Trading
303:Options
1653:667781
1651:
1643:
1610:
1589:
1206:Growth
1194:Market
1179:Growth
861:where
641:shares
637:equity
575:equity
565:, the
462:public
259:Option
64:
1756:Stock
1641:S2CID
1587:JSTOR
1189:Price
1082:; and
779:taxed
669:) of
447:crime
432:asset
317:Swaps
249:Money
156:Stock
1693:and
1649:SSRN
1608:ISBN
1377:The
1314:and
1211:rate
924:cost
922:The
727:cost
703:also
663:bond
654:(or
633:bond
629:debt
573:and
571:debt
561:and
387:Bull
1633:doi
1554:doi
1090:– R
557:In
412:ESG
244:ETF
2298::
1647:.
1639:.
1629:22
1627:.
1606:.
1583:48
1581:.
1550:45
1548:.
1544:.
1115:.
1108:.
1086:(R
643:.
1683:e
1676:t
1669:v
1655:.
1635::
1616:.
1593:.
1560:.
1556::
1225:.
1201:+
1183:)
1175:+
1172:1
1169:(
1151:=
1146:s
1143:c
1139:K
1094:)
1092:f
1088:m
1075:m
1073:R
1062:s
1060:β
1049:f
1047:R
1040:s
1038:E
1018:)
1013:f
1009:R
1000:m
996:R
992:(
987:s
979:+
974:f
970:R
966:=
961:s
957:E
894:f
890:R
869:T
857:,
845:)
842:T
836:1
833:(
830:)
822:+
817:f
813:R
809:(
806:=
801:D
797:K
546:e
539:t
532:v
231:)
222:(
210:)
196:(
66:·
20:)
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